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Step 5: Identify Quantifiable and Non-Quantifiable Benefits

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1 Step 5: Identify Quantifiable and Non-Quantifiable Benefits
Benefits: The quantitative and qualitative results expected as a result of implementing an alternative. Identify benefits one COA at a time … no comparison of COAs is done at this point. Benefits provide the starting point for identifying alternative selection criteria (Step 6). Best source for identifying benefits: Subject matter experts Two broad categories: Quantifiable benefits are measurable … they can be assigned a numeric value. Non-quantifiable benefits cannot be measured with any reasonable accuracy or possibly at all. 1. Define the Problem/Opportunity 2. Define the Scope; Formulate Facts and Assumptions 3. Define Alternatives 4. Develop Cost Estimate for each Alternative 5. Identify Quantifiable and Non- Quantifiable Benefits 6. Define Alternative Selection Criteria 7. Compare Alternatives 8. Report Results and Recommendations Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process Development of Step 5 in the Army CBA process, Identify Quantifiable and Non-Quantifiable Benefits. Identify benefits one COA at a time … no comparison of COAs is done at this point. Benefits provide the starting point for identifying alternative selection criteria (Step 6). Benefits: The quantitative and qualitative results expected as a result of implementing an alternative. Best source for identifying benefits: Subject matter experts Two broad categories: Quantifiable benefits are measurable … they can be assigned a numeric value. Non-quantifiable benefits cannot be measured with any reasonable accuracy or possibly at all. Questions for the reviewer: Do the perceived benefits reflect an enterprise perspective? Are the benefits consistent with the problem statement? CBA Training Slides

2 Typical Types of Benefits
Objective Benefits Cost (wide range of cost data can be developed) Cycle time or material usage Revenue generated from sales of assets Readiness ratings Number of documents processed Subjective Benefits Customer satisfaction Morale Mission capability Quality of service Risk to Soldiers and other personnel Public perception of the Army All objective benefits are quantifiable Usually quantifiable Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process Provide typical examples of objective and subjective benefits. Objective Benefits Cost (wide range of cost data can be developed) Cycle time or material usage Revenue generated from sales of assets Readiness ratings Number of documents processes Subjective Benefits Customer satisfaction Morale Mission capability Quality of service Risk to Soldiers and other personnel Public perception of the Army Usually not quantifiable The analysis should clearly identify what the Army will get in return for the costs that will be incurred. CBA Training Slides UNCLASSIFIED

3 Case Study “Choosing An Item From A Lunch Menu”
Step 5 – Identify Quantifiable and Non-Quantifiable Benefits Guidelines for Identifying benefits What are the expected benefits from each COA individually Benefits provide a starting point for identifying selection criteria Best source for identifying benefits are the subject matter experts Activity Step 2 Identify key elements of information from case study data Step 5 – Identify Quantifiable and Non-Quantifiable Benefits Definition of Benefits Quantifiable Benefit - Are measurable, they can be assigned a numeric value Non-Quantifiable Benefits – Cannot be reasonably measured, they are subjective Guidelines for Identifying benefits What are the expected benefits from each COA individually Benefits provide a starting point for identifying selection criteria Best source for identifying benefits are the subject matter experts

4 Case Study: “Choosing An Item From A Lunch Menu”
Step 5 - Identify Quantifiable and Non-Quantifiable Benefits QUANTIFIABLE NON COA BENEFIT Activity Step 2 Identify key elements of information from case study data Template for benefits. What quantifiable benefits are there for each COA? What non-quantifiable benefits? [Allow the students to make suggestions and then proceed to the next slide.]

5 Case Study: “Choosing An Item From A Lunch Menu”
Step 5 - Identify Quantifiable and Non-Quantifiable Benefits QUANTIFIABLE (Sat. Fat) 22g 42g 14g 41g NON None Taste Hunger Satisfaction Heart health COA CHICKEN PARMIGIANA & DIET COKE PIZZA & BEER BURGER & COKE GREEK SALAD & MINT TEA SKIP LUNCH BENEFIT Instructor notes/Solutions Step 5 - Identify quantifiable and non-quantifiable benefits. Sample response to the Case Study In this case we are describing benefit as good health. High fat content is considered bad health, low fat content is considered good health. This is a quantifiable benefit (lower being considered more beneficial). Non quantifiable benefits include: taste, hunger satisfaction, and hearth health. [Students may come up with others. These are subjective.] Answer the Questions for the reviewer: Do the perceived benefits reflect an enterprise perspective? Are the benefits consistent with the problem statement? Have class agree on what the benefits are prior to moving on to the next step

6 Step 6: Define Alternative Selection Criteria
Alternative selection criteria are the standards upon which the decision will be based. CBAs must contain documentation that identifies the recommended decision criteria and the extent to which each alternative satisfies each of the criteria. 1. Define the Problem/Opportunity 2. Define the Scope; Formulate Facts and Assumptions 3. Define Alternatives 4. Develop Cost Estimate for each Alternative 5. Identify Quantifiable and Non- Quantifiable Benefits 6. Define Alternative Selection Criteria 7. Compare Alternatives 8. Report Results and Recommendations Questions for the reviewer: Are the selection criteria appropriately tailored to the problem statement or requirement? Has appropriate consideration been given to both cost and non-cost criteria? If weighting of selection criteria has been used, has the leader agreed with the weighting? Do the selection criteria appear unrealistically skewed to favor one alternative? Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process Step 6 of the Army CBA process, Define Alternative Selection Criteria Alternative selection criteria are the standards upon which the decision will be based. CBAs must contain documentation that identifies the recommended decision criteria and the extent to which each alternative satisfies each of the criteria Questions for the reviewer: Are the selection criteria appropriately tailored to the problem statement or requirement? Has appropriate consideration been given to both cost and non-cost criteria? If weighting of selection criteria has been used, has the leader agreed with the weighting? Do the selection criteria appear unrealistically skewed to favor one alternative? CBA Training Slides

7 An Approach to Identifying Selection Criteria
Develop list of candidate criteria Relevant cost issues Benefits identified in Step 5 Negative impacts of the alternative COAs Guidance provided by the leader Objectives specified by HQDA or other headquarters (see next slide) Pare the list down to the handful of most meaningful factors that should be taken into account in selecting a COA. Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process An Approach to Identifying Selection Criteria. Develop list of candidate criteria Relevant cost issues Benefits identified in Step 5 Negative impacts of the alternative COAs Guidance provided by the leader Objectives specified by HQDA or other headquarters (see next slide) Pare the list down to the handful of most meaningful factors that should be taken into account in selecting a COA. The person best qualified to identify selection criteria is the process owner or subject matter expert. The person best qualified to identify selection criteria is the process owner or subject matter expert CBA Training Slides UNCLASSIFIED

8 Possible Selection Criteria: Non-Financial
Number of items produced Accuracy rate Time to delivery or fielding Interoperability with current systems Maintainability Political goodwill Combat effectiveness Criteria imposed by higher headquarters. E.g., in a recent POM build, HQDA directed that all issues be evaluated for their impact on ARFORGEN. Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process Here is a list of possible non-financial selection criteria. Define how each criterion is measured and by whom. Make sure that the entity providing the measurement is credible. CBA Training Slides UNCLASSIFIED

9 Possible Selection Criteria: Financial
Total Lifecycle Cost: Compares the total cost of two or more COAs over a relevant time period. Use of Net Present Value might be appropriate in situations involving major investments Benefit-Cost Ratio: Compares the present value of total benefits with the present value of total costs. Break-Even Point (Payback Period): The point in time at which the cumulative cost reduction generated by a COA equals its one-time investment or implementation cost. i.e., it is the point in time at which the COA has paid for itself. Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process Note: Given a range of quantities between alternatives, the alternative with the highest net present value may not be the alternative with the highest benefit-cost ratio. The following are some possible selection criteria that are financial in nature. Total Lifecycle Cost: Compares the total cost of two or more COAs over a relevant time period. Use of Net Present Value might be appropriate in situations involving major investments Benefit-Cost Ratio: Compares the present value of total benefits with the present value of total costs. Break-Even Point (Payback Period): The point in time at which the cumulative cost reduction generated by a COA equals its one-time investment or implementation cost. i.e., it is the point in time at which the COA has paid for itself Reminder: Financial criteria must be evaluated in constant dollars. CBA Training Slides UNCLASSIFIED

10 Case Study: “Choosing An Item From A Lunch Menu”
Step 6 – Define Alternative Selection Criteria Guidelines for Creating Selection Criteria These are the standards upon which the decision will be based Must be able to identify the extent to which each COA satisfies the Selection Criteria CBA team must be sure selection criteria represent the problem, and not the interests of the individual, CBA team or the decision maker Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process Step 6 – Define Alternative Selection Criteria Guidelines for Creating Selection Criteria These are the standards upon which the decision will be based Must be able to identify the extent to which each COA satisfies the Selection Criteria CBA team must be sure selection criteria represent the problem, and not the interests of the individual, CBA team or the decision maker

11 Case Study: “Choosing An Item From A Lunch Menu”
Step 6 – Define Alternative Selection Criteria Step 6 Define Alternative Selection Criteria Criteria Description 1 2 3 4 Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process Sample Selection Criteria for the Lunch Menu case. Hunger Satisfaction Cost Nutritional Value Taste Note: Cost is not the only, but is one of the selection criteria [Add the class agreed upon selection criteria to the matrix in the Excel spreadsheet, if desired. Limit selection criteria 6 items or less tailored to the problem] Answer the Questions for the Reviewer Are the selection criteria appropriately tailored to the problem statement or requirement? Has appropriate consideration been given to both cost and non-cost criteria? Do the selection criteria appear unrealistically skewed to favor one alternative?

12 Case Study: “Choosing An Item From A Lunch Menu”
Step 6 – Define Alternative Selection Criteria Step 6 Define Alternative Selection Criteria Criteria Description 1 Hunger Satisfaction 2 Cost 3 Nutritional Value 4 Taste Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process [Add the class agreed upon selection criteria to the matrix in the Excel spreadsheet, if desired. Limit selection criteria 6 items or less tailored to the problem] Answer the Questions for the Reviewer Are the selection criteria appropriately tailored to the problem statement or requirement? Has appropriate consideration been given to both cost and non-cost criteria? Do the selection criteria appear unrealistically skewed to favor one alternative?

13 Step 7: Comparison of Alternatives
7a. Compare COAs using alternative selection criteria to identify the preferred COA. 7b. If there is a bill associated with the recommended COA, identify the billpayer. 7c. Identify the positive and negative impacts of the second- and third-order effects. What must be done to manage the negative impacts? 7d. Determine the robustness of the conclusions. If anything changes – assumptions, costs, benefits, etc.. – would the recommendation change? 7e. Identify the high-risk aspects of the recommended COA and define appropriate risk mitigation measures. 1. Define the Problem/Opportunity 2. Define the Scope; Formulate Facts and Assumptions 3. Define Alternatives 4. Develop Cost Estimate for each Alternative 5. Identify Quantifiable and Non- Quantifiable Benefits 6. Define Alternative Selection Criteria 7. Compare Alternatives 8. Report Results and Recommendations Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process Step 7 - Comparison of Alternatives Comparing alternatives is outlined here as a 5 step process Using selection criteria compare alternatives using weights and rankings to identify the preferred COA b. If there is a bill associated with the recommended COA, identify the billpayer (how will the cost of the COA be covered) c. Identify the positive and negative impacts of the second- and third-order effects. What must be done to manage the negative impacts? d. Determine the robustness of the conclusions. If anything changes – assumptions, costs, benefits, etc…-would the recommendation change? e. Identify the high-risk aspects of the recommended COA and define appropriate risk mitigation measures. CBA Training Slides

14 Step 7a: Compare COAs Using Alternative Selection Criteria
The essence of the CBA process is in comparing at least two courses of action in order to identify the preferred alternative. As a general rule, the preferred alternative is the alternative that provides the greatest amount of benefit in relation to its cost. Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process The essence of the CBA process is in comparing at least two courses of action in order to identify the preferred alternative. As a general rule, the preferred alternative is the alternative that provides the greatest amount of benefit in relation to its cost. CBA Training Slides UNCLASSIFIED

15 Aid for Completing Step 7a
Costs Benefits Selection Criteria Equal Unequal Alternative that provides greatest benefits for given cost Subjective reasoning and a fortiori analysis Alternatives ranked in order (based on benefit/cost ratio, net present value, or other relevant criterion) Least costly alternative Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process If costs are equal and benefits unequal, it is obvious that we would choose the COA with the greatest benefits for the same cost. If costs are unequal and benefits are equal, we would clearly choose the COA with the lowest cost. If costs are equal and benefits appear equal, this calls for subjective reasoning and a fortiori analysis. A fortiori is Latin for ‘even more so’ or ‘more conclusively.’ If costs are unequal and benefits are unequal, Alternatives should be ranked in order (based on benefit/cost ratio, net present value, or other relevant criterion) In decision theory, an analysis made to intentionally favor alternative solutions when compared to the solution adjudged as best. The alternatives are deliberately weighted to make them look better. If the adjudged-best solution still remains the best, its position as the likely choice is further strengthened. CBA Training Slides UNCLASSIFIED

16 Step 7b: Billpayers Step 7c: 2nd- and 3rd-Order Effects
7b. Billpayers are the funding sources that have been identified to cover the cost of the recommended COA. In most cases, the individual or team developing the CBA won’t have the authority to identify billpayers. This requires collaboration with the organization’s resource manager and prioritized. Lesson learned: Savings can be used as a billpayer, but cost avoidances cannot. Savings: A cost reduction that enables a manager to move funds from one function to another Cost avoidance: A cost reduction that does not enable a manager to move funds. Cost avoidance cannot be used as a billpayer. 7c. Second- and third-order effects are the “ripple effect” of the recommended COA: “The recommended COA will solve our problem, but it will also create an additional factor we will have to deal with.” Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process 7b. Billpayers are the funding sources that have been identified to cover the cost of the recommended COA. In most cases, the individual or team developing the CBA won’t have the authority to identify billpayers. This requires collaboration with the organization’s resource manager and prioritized. Lesson learned: Savings can be used as a billpayer, but cost avoidances cannot. Savings: A cost reduction that enables a manager to move funds from one function to another Cost avoidance: A cost reduction that does not enable a manager to move funds. Cost avoidance cannot be used as a billpayer. 7c. Second- and third-order effects are the “ripple effect” of the recommended COA: “The recommended COA will solve our problem, but it will also create an additional factor we will have to deal with.” An example of a second-order effect in the APS case, is the available capacity of the outside storage locations. Valuable real estate may go unutilized if we stay with LAMS. CBA Training Slides UNCLASSIFIED

17 Questions for Steps 7a thru 7c
Does the analysis clearly demonstrate how the recommended COA best satisfies the selection criteria? Is the recommended billpayer consistent with Army priorities? Do the benefits of the recommended COA justify the billpayer? Are second- and third-order effects identified, and are the negative impacts acceptable? Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process Provides check questions to assess the adequacy of the formulation of Comparing Alternatives. Does the analysis clearly demonstrate how the recommended COA best satisfies the selection criteria? Is the recommended bill payer consistent with Army priorities? Do the benefits of the recommended COA justify the bill payer? Are second- and third-order effects identified, and are the negative impacts acceptable? CBA Training Slides UNCLASSIFIED

18 Steps 7d and 7e: Sensitivity Analysis and Risk Assessment
7d. Sensitivity analysis identifies the impact on the recommendation should any element of the analysis change. 7e. Risk assessment describes risks that can impact the achievement of stated benefits or the cost of solving the business problem. For each risk, assess the likelihood of occurrence and develop a mitigation strategy. Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process Briefly discuss 7d and 7e with the class. Sensitivity analysis identifies the impact on the recommendation should any element of the analysis change. Risk assessment describes risks that can impact the achievement of stated benefits or the cost of solving the business problem. For each risk, assess the likelihood of occurrence and develop a mitigation strategy. Examples of Risks in the APS case; loss of goodwill at the warehouse lease locations, CBA Training Slides UNCLASSIFIED

19 Questions for Steps 7d and 7e
How sensitive is the recommendation to possible changes in costs, benefits, assumptions, etc..? If the recommendation is highly sensitive to changes, has more in-depth analysis been done? Which elements of the CBA require sensitivity analysis? Test only those elements for which there is considerable uncertainty or risk. Can include any element: Assumptions, constraints, costs, benefits, weighting of selection criteria, etc.. Address sensitivity from either or both perspectives: What is the impact of a change of such and such a magnitude? How large a change can occur before the recommendation changes? Have all reasonably likely risks and their impacts been identified? Are the recommended mitigation approaches adequate? Are they affordable? Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process Provide additional questions to assist in the assessment of the adequacy of the development of Step 7, Compare Alternatives How sensitive is the recommendation to possible changes in costs, benefits, assumptions, etc.? If the recommendation is highly sensitive to changes, has more in-depth analysis been done? Which elements of the CBA require sensitivity analysis? Test only those elements for which there is considerable uncertainty or risk. Can include any element: Assumptions, constraints, costs, benefits, weighting of selection criteria, etc. Address sensitivity from either or both perspectives: What is the impact of a change of such and such a magnitude? How large a change can occur before the recommendation changes? Have all reasonably likely risks and their impacts been identified? Are the recommended mitigation approaches adequate? Are they affordable? CBA Training Slides UNCLASSIFIED

20 Case Study: “Choosing An Item From A Lunch Menu”
Step 7 – Comparison of Alternatives Comparing Alternatives is a 5 step process in the Army CBA Guidelines for Comparing Alternatives The essence of the CBA process is in comparing at least two COAs in order to identify the preferred alternative The preferred alternative is the choice that provides the greatest amount of benefit in relation to its cost Do the weights and ranks represent the problem and not the interests of the individual, CBA team or decision maker? Does the decision make sense? Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process Step 7 – Comparison of Alternatives Comparing alternatives is a 5 step process in the Army CBA. Quickly review 7a. Compare COAs using alternative selection criteria to identify the preferred COA. 7b. If there is a bill associated with the recommended COA, identify the billpayer. 7c. Identify the positive and negative impacts of the second- and third-order effects. What must be done to manage the negative impacts? 7d. Determine the robustness of the conclusions. If anything changes – assumptions, costs, benefits, etc... – would the recommendation change? 7e. Identify the high-risk aspects of the recommended COA and define appropriate risk mitigation measures. Guidelines for Comparing Alternatives The essence of the CBA process is in comparing at least two COAs in order to identify the preferred alternative The preferred alternative is the choice that provides the greatest amount of benefit in relation to its cost Do the weights and ranks represent the problem and not the interests of the individual, CBA team or decision maker? Does the decision make sense? Does the weighting and ranking represent the problem and not the interests of the individual, CBA team or the decision maker? This is the most subjective step in the process, and requires careful consideration. There is no one correct answer, and the CBA team is ultimately responsible for supporting the recommendation to CBARB and the decision makers.

21 Step 7 – Compare Alternatives
Insert Excel Spreadsheet Decision Matrix Lunch Menu Case Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process The Decision Matrix tool is very helpful in executing Step 7. This screen shot reflects the results of the ranking the selection criteria against each COA. The highest number reflects recommend COA. Which is the “winner”? (Greek Salad). (This is one example. Excel tool can be used to reflect results of actual class.) Note: The weighting of the selection criteria is subjective and should be very carefully considered by the CBA team prior to finalizing a recommendation. The Excel spreadsheet allows us to try various weightings to see how it changes the results of the analysis. Note: This recommendation is based on the selection criteria, ranking, and decision matrix results. Different selection criteria and rankings may result in a different recommendation. Recognize the CBA is a structured thought process and is considered a “tool” to support the selection of a “cost informed” decision.

22 Step 8: Report Results and Recommendations
Preferred format for documenting the CBA is a narrative. This will probably be accompanied by a decision briefing. Results and recommendations summarize the analysis and make conclusive statements about the comparisons of alternatives. The results address how the alternatives were ranked using the criteria developed in Step 6. Following a clear statement of the conclusions, there should be a firm recommendation regarding the preferred alternative. All data and other information used in Steps 1-8 must be adequately documented. Supporting information should be identified so decision makers and analysts can understand how Steps 1-8 were developed. 1. Define the Problem/Opportunity 2. Define the Scope; Formulate Facts and Assumptions 3. Define Alternatives 4. Develop Cost Estimate for each Alternative 5. Identify Quantifiable and Non- Quantifiable Benefits 6. Define Alternative Selection Criteria 7. Compare Alternatives 8. Report Results and Recommendations Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process Step 8 - Report Results and Recommendations. Preferred format for documenting the CBA is a narrative. This will probably be accompanied by a decision briefing. Results and recommendations summarize the analysis and make conclusive statements about the comparisons of alternatives. The results show how the alternatives were ranked using the criteria developed in Step 6. Following a clear statement of the conclusions, there should be a firm recommendation regarding the preferred alternative. All data and other information used in Steps 1-8 must be adequately documented. Supporting information should be identified so decision makers and analysts can understand how Steps 1-8 were developed. Questions for the reviewer: Does the package contain all key elements, accompanied by supporting documentation? Does the recommended COA address the problem, and is it consistent with the assumptions and constraints? Does the analysis explain how the recommended COA is best at satisfying the selection criteria? Questions for the reviewer: Does the package contain all key elements, accompanied by supporting documentation? Does the recommended COA address the problem, and is it consistent with the assumptions and constraints? Does the analysis explain how the recommended COA is best at satisfying the selection criteria? CBA Training Slides

23 Step 8 – Report Results and Recommendations
Decision package must present a strong value proposition. That is, it must clearly show that the benefits of the recommended COA more than justify the costs and risks. Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process The decision package must present a strong value proposition. That is, it must clearly show that the benefits of the recommended COA more than justify the costs and risk. We will discuss how to report your results and recommendations. The CBA Guide, available at the Cost & Performance Portal, includes a narrative report for the APS example. CBA Training Slides UNCLASSIFIED

24 Case Study “Choosing An Item From A Lunch Menu”
Step 8 – Report Results and Recommendations Guidelines Report results in a narrative form. Executive summary includes, Problem statement, COAs, summary of necessary resources, Recommendation, and Cost summary CBA report includes the executive summary and all supporting documentation from steps 1-7. Activity Step 2 Identify key elements of information from case study data Step 6 – Define Alternative Selection Criteria Guidelines for Step 8 Report results in a narrative form. Executive summary includes, Problem statement, COAs, summary of necessary resources, Recommendation, and Cost summary CBA report includes the executive summary and all supporting documentation from steps 1-7.

25 Case Study: “Choosing An Item From A Lunch Menu”
Step 8: Report Results and Recommendations Executive Summary Problem: D Brief description of methodology and number of COAs considered to determine the best menu choice. Existing or new funding? Recommendation: Cost to Implement: $ Other: Instructor notes/Solutions Step 8 - Report Results and Recommendations for the Lunch Menu case. Recommendation is based on the selection criteria, ranking, and application of the supporting decision matrix by the author. Different selection criteria and ranking may result in a different recommendation. It should be recognized that the CBA is a structured thought process and should be considered a “tool” to support a “cost informed” decision. Make sure the Report results and recommendations include an Executive Summary Include Pictures / Photos (varied media) in the report Decision package must present a strong value proposition. It must clearly show that the benefits of the recommended COA more than justify the costs and risks. Answer the Questions for the Reviewer Does the package contain all key elements, accompanied by supporting documentation? Does the recommended COA address the problem, and is it consistent with the assumptions and constraints? Does the analysis explain how the recommended COA is best at satisfying the selection criteria?

26 Case Study: “Choosing An Item From A Lunch Menu”
Step 8: Report Results and Recommendations Executive Summary Problem: Decide what to have for lunch today Five Courses of Action were developed to determine the best menu choice. All COAs utilize existing funding allocated to the action. Recommendation: Order the Greek Salad and Mint Tea Cost to Implement: $ 9.99 Sat Fat content: 14g Instructor notes/Solutions Step 8 - Report Results and Recommendations for the Lunch Menu case. Recommendation is based on the selection criteria, ranking, and application of the supporting decision matrix by the author. Different selection criteria and ranking may result in a different recommendation. It should be recognized that the CBA is a structured thought process and should be considered a “tool” to support a “cost informed” decision. Make sure the Report results and recommendations include an Executive Summary Include Pictures / Photos (varied media) in the report Decision package must present a strong value proposition. It must clearly show that the benefits of the recommended COA more than justify the costs and risks. Answer the Questions for the Reviewer Does the package contain all key elements, accompanied by supporting documentation? Does the recommended COA address the problem, and is it consistent with the assumptions and constraints? Does the analysis explain how the recommended COA is best at satisfying the selection criteria?

27 CBA Summary DASA-CE is here to help!
CBA has top-down support and is becoming embedded in Army decision-making processes. CBA helps leaders and managers make better resource-informed decisions and thus helps the Army make better use of resources that are becoming increasingly constrained. Robust analysis makes it easier to explain and defend Army resource requirements. Many of us will be active users of CBAs – either helping to develop them or reviewing them for senior decision makers. Support is available – tools, models, guides, dedicated mailbox, additional training. CBA is based on a sound, logical approach to problem solving, similar to MDMP. It’s not rocket science. Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process CBA has top-down support and is becoming embedded in Army decision-making processes. CBA helps leaders and managers make better resource- informed decisions and thus helps the Army make better use of resources that are becoming increasingly constrained. Robust analysis makes it easier to explain and defend Army resource requirements. Many of us will be active users of CBAs – either helping to develop them or reviewing them for senior decision makers. Support is available – tools, models, guides, dedicated mailbox, additional training. CBA is based on a sound, logical approach to problem solving, similar to MDMP. It’s not rocket science. DASA-CE is here to help! CBA Training Slides

28 Learning Check What does it meant to define the scope of the CBA?
Why is it important to formulate facts and assumptions? Q. What does it meant to define the scope of the CBA? Defining the scope means to limit the range of coverage encompassed by an initiative or proposal along specific dimensions such as time, location, organization, technology, or function. Q. Why is it important to formulate facts and assumptions? A. Assumptions are factors or conditions that are essential to the success of the solution, are beyond the control of the organization, and impose risk. It is always important to identify assumptions and test for validity through sensitivity analysis. With sufficient time for analysis, we can sometimes convert assumptions to facts, or at least reduce uncertainty.

29 resources Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process The next few slides describe some resources that are available to you. Look them over and keep them as a reference. CBA Training Slides UNCLASSIFIED

30 CBA Tools and Models Some of the websites listed here require user accounts. In most cases, anyone with a dot mil address can obtain an account. You are encouraged to scan these sites and request an account at any site that appears to be useful to you. This will save you time when you need to use the site to support a CBA or other projects. Tool/Model URL Purpose FORCES Cost Models https://www.osmisweb.army.mil/forces/login.aspx Suite of models that provides quick and reasonable unit cost estimates to a wide variety of users Army Military-Civilian Cost System (AMCOS) https://www.osmisweb.army.mil/amcos/app/home.aspx Personnel costs for military, civilian, contractor ASA(FM&C) Website Inflation indices Capabilities Knowledge Base Research, development, and acquisition costing for major weapon/materiel systems Automated Cost Estimating Integrated Tools (ACEIT) Automated Cost Data Base (ACDB) Operating & Support Management Information System (OSMIS) https://www.osmisweb.army.mil/osmisrdb/login.aspx Operating and support information for major weapon/materiel systems Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process FORCES and AMCOS are highlighted because we will be getting some hands-on experience with them later in the course. CBA Training Slides

31 Principal Officials of HQDA
Principal Officials of HQDA comprise the following individuals. These were the addressees on the USA/VCSA 30 December 2010 memo regarding cost-benefit analysis Secretary of the Army Chief of Staff of the Army Under Secretary of the Army Vice Chief of Staff of the Army ASA (AL&T) ASA (CW) ASA (FM&C) ASA (IE&E) ASA (M&RA) General Counsel Administrative Assistant to the SECARMY Deputy Under Secretary of the Army Chief Information Officer/G-6 The Inspector General The Auditor General Chief of Legislative Liaison Chief of Public Affairs Director, Small Business Programs Chief, National Guard Bureau Director of the Army Staff Sergeant Major of the Army DCS, G-1 DCS, G-2 DCS, G-3/5/7 DCS, G-4 DCS, G-8 Chief, Army Reserve Chief of Engineers The Surgeon General Assistant Chief of Staff for Installation Management The Judge Advocate General Chief of Chaplains Provost Marshal General Activity Step 2 Describe the Army 8 Step Cost Benefit Analysis process A list of principal officials at HQDA. CBA Training Slides UNCLASSIFIED


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